And until last month, when it was disbanded, the assemblyman also continued to accept contributions for a campaign finance committee left over from his unsuccessful 1996 Democratic primary challenge to South Bay congressman Bob Filner. Late last year, federal records show, Vargas used a large portion of those funds to repay himself thousands of dollars in personal loans he had made to his campaign committee during his congressional bid.
Much of the remaining cash was used to pay salaries and consulting fees of longtime associates, several of whom have been on and off of Vargas's campaign and assembly payrolls and that of his protégé and former aide, San Diego Eighth District city councilman Ralph Inzunza, who is under indictment in the Cheetahs strip club bribery case.
According to a December 12, 2003, report filed with the Federal Elections Commission, the Vargas congressional committee collected a total of $36,290 during 2003, $28,790 from individuals and $7500 from political action committees. The majority of the PAC funds came from the finance and insurance industries, including $2000 from the American International Group Employee Political Action Committee on November 18 and $2500 from the Washington Mutual Political Action Committee on April 25.
Of the 29 individual Vargas contributors in 2003, 4 were attorneys, 11 were physicians, and more than 20 listed their employer as an insurance company, the majority either State Farm or Farmers. Some of them gave the maximum $2000. Most of the donations were made in early June 2003, as SB 1, the financial privacy bill opposed by the insurance companies, was making its way through the senate and assembly.
Farmers Insurance agent Frank Silva of San Diego and David and Kathryn Kupfer of Rancho Santa Fe resided in San Diego County. Kupfer's occupation was listed as a physician, his wife's as a registered nurse. Many of the remainder of the donors listed their residences as parts of Los Angeles County (including Rolling Hills, Beverly Hills, and Manhattan Beach) or Northern California.
About a third of the proceeds collected by the committee last year were used to pay Vargas and his wife Adrienne back for personal loans they had made to the committee more than seven years earlier, in March and April of 1996, to finance his congressional campaign against Filner. On July 17, 2003, the reports show, the couple received $10,000 from the committee.
Then, on December 4, 2003, Vargas collected an additional $2225, which was said to represent the balance due of a $4100 personal loan he had made to his congressional campaign committee in April 1997. On December 3, 2003, the day before Vargas received that payment, the filing shows that the American International Group, Inc., of New York contributed $2000 to the committee. Neither Vargas nor his staff responded to telephone calls requesting comment.
Whether coincidental or not, American International is a major player in the workers' compensation insurance business in California. Two weeks ago, after assembly insurance committee chairman Vargas agreed with ranking Republican committee member Abel Maldonado to postpone a vote on a workers' compensation reform bill so that the Schwarzenegger administration could negotiate for changes favored by the insurance lobby, American International lobbyist Kevin Sloat told reporters he was encouraged by the development. "They've started to agree on a process, and then they'll move into the details," Sloat told the Los Angeles Times. "The next step is critical."
Many with ties to Vargas have benefited from payments from his congressional campaign committee funded by last year's insurance industry contributions. On April 15 of last year, for instance, Colin Rice, who had worked as Vargas's chief of staff, received $2000 for what was noted on the campaign committee filing as "debt repay" for back salary.
Others listed as receiving payments from the Vargas congressional campaign committee included Javier Angulo of Chula Vista ($1000), George Balgos of San Diego ($1500), Andrew Lee of San Diego ($3000), Dan Maruccia of San Diego ($500), Willie Manley of San Diego ($3000), Richard D'Ascoli of San Diego ($3000), Lee Biddle of San Diego ($3500), and Bill Trammell of San Diego ($2000).
Manley is pastor of the Greater Life Baptist Church in Vargas's assembly district. In a telephone interview this week, Manley said that the payment from the committee, coming as it did so many years after the end of Vargas's unsuccessful congressional bid, caught him by surprise.
"They just said, here's a bonus and thank you very much.... He just volunteered and gave me a fee." Manley said that his efforts on behalf of the congressional campaign involved dealing with ministers and building support for Vargas in the district. "I got paid for doing some publicity for him, for letting some pastors know about the campaign. I do quite a lot of that type of thing." He added that he donated the entire payment to Building Better Lives, a nonprofit organization he runs.
The occupation of D'Ascoli, who gave $250 to Inzunza's 2006 city council reelection committee on August 11, 2003, is listed on that disclosure as a "project manager" for Pacific Bell. A year earlier, city financial disclosure records show, D'Ascoli was paid $1000 by the 2002 Inzunza campaign for "consulting" activities.
Angulo gave $250 to the Inzunza fund on November 3, 2003, and is listed on that disclosure as a San Diego schoolteacher.
Balgos has long worked for Vargas, first as a city council aide and currently as a field representative. In June 2002, Inzunza named him a candidate for the city task force attempting to deal with the Chargers and their controversial Qualcomm Stadium lease. Inzunza also proposed appointing Vargas's chief of staff Colin Rice, whose wife Jaime Fox Rice is an Inzunza deputy, to the panel. Last summer, she was called to testify before the federal grand jury that ultimately indicted her boss.
Maruccia, a graduate of University of San Diego law school, is a deputy legislative counsel to the California Office of Legislative Counsel in Sacramento, which he joined in 2001, according to the organization's website. The Legislative Counsel drafts bills and renders various legal opinions regarding pending legislation and provides legal services to the governor's office and the assembly and senate.